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Old Sep 11, 2017, 11:12pm   #113
 
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How will the GBP react to CPI and BoE rate decision?

KeyToMarketsUK started this thread We are watching GBPUSD (neutral), GBPNZD (bullish) and EURGBP (neutral)

Upcoming data:

Tue, Sep 12 CPI

Consumer price inflation is likely to move higher once again.

Barclays: August CPIH inflation (Tuesday) is likely to remain unchanged at 2.6% y/y (consensus: 2.7% y/y; previous: 2.6% y/y)

Thu, Sep 14 BoE rate announcement (12.00BST)

The MPC’s decisions on interest rates are announced on Thursday (Sep 14) at 12 noon.

Preview: We expect the Bank of England to leave monetary policy unchanged at 0.25%.

At its meeting ending on 2 August 2017, the MPC voted by a majority of 6-2 to maintain Bank Rate at 0.25%. But in June meeting (14 June 2017), the MPC voted by a majority of 5-3 to maintain Bank Rate at 0.25%.

According to Brian Hilliard at Societe Generale, “Market speculation of rate increases has receded. The committee will move back to full strength with the arrival of Sir David Ramsden as the new Deputy Governor, Markets and Banking. We expect him to vote for unchanged policy, taking the vote to 7-2”.

Barclays: We expect the Bank of England to keep its policy settings unchanged this week (Thursday) while seeking to support the currency with more hawkish rhetoric.

GBPUSD TECHNICAL VIEW

The cable has been moving higher for three straight weeks. From August low’s GBP appreciated more than 3.5%, trading on a verge of a breakout. Earlier we forecast a bullish reaction twice at 1.2800 and again at 1.2980.

It has a parallel resistance seems at 1.3220 and 1.3270 above this further head room could expect to 1.3370, 1.3440 and 1.3500. The recent short-term rebound likely to face resistance at the descending trendline as shown in the below chart.

Click the image to open in full size.

Ahead of the CPI and BoE policy announcement the cable has a potential resistance at 1.35/1.3530 if settles above 1.3350.

Alternatively, fails at 1.3270/1.3370, retracement expected for 1.30 and 1.2950.

GBPNZD update 2: We still believe the upside risk remains.

We have previously advised buying at 1.7940 levels a week ago. From our buying level, it has moved 300 pips till date. We still believe the upside risk remains in the medium term perspective. Last week’s retracement re-tested the earlier breakout, will aim at 1.85/1.86 levels. Until the cross holds the 1.7650 bullish view remains.

Supports moved to 1.8100, 1.8000 and 1.7900.

Click the image to open in full size.

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Old Sep 12, 2017, 11:11pm   #114
 
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Brent: Support elevate to 53

KeyToMarketsUK started this thread
  • Rejected at 78.6%
  • Range expected between 55-50$.
  • Pattern divergence spotted between BRENT and WTI

Brent oil re-tested the earlier resistance zone/38.2% and rebounded on Monday session. Impact of Hurricane Irma and Harvey are likely to support the oil prices in the near term.

Pattern divergence: The price pattern has given an upside breakout through the five and eight months descending trend line. But rejected at 78.6% (Jan-June fall). If we turn to WTI daily chart, the breakouts are not available. The price has rejected at 200DMA

Click the image to open in full size.

Click the image to open in full size.
The spread between WTI and Brent climbed to 5.85$ vs 4.93$ last week. This week, investors focus on Monthly reports from the IEA and OPEC.

S&P Platts reported, “Distribution analysis shows that Brent’s monthly fluctuation rate is trading within one of the lowest volatility intervals in the last two years, indicating that a mean reverting movement will likely happen in the coming weeks. Analyst Vito Turitto reports”.

Resistance seems at 54.40, 55 and 55.90/56. Additional resistance seems at 56.50 (earlier swing high)

Click the image to open in full size.

Alternatively, a move below 52.80 needed to re-test the earlier support base 52.20-52. The selling pressure accelerates below 52, could open to 51.10/51, 50.50 and 50.

View: Focus on WTI H4 chart to forecast further extension. We’ll be keeping an eye.

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Old Sep 14, 2017, 2:44am   #115
 
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USDJPY: US CPI, Retail sales and next week’s FOMC statement are the key risk events.

KeyToMarketsUK started this thread
  • USD dominance continues against AUD,EUR,JPY,CHF,TRY and ZAR so far this week.
  • Gold, Silver, Platinum, Palladium and Copper pullback.
  • Oil prices extended the rally.
USDJPY rebounds on the third straight day, closed with 0.3% gains on Wednesday.

Data Review:

PPI advanced 0.2 percent in August forecast 0.3.

Upcoming data:

Thu, Sep 14

CPI

Barclays: We forecast headline CPI at 0.4% m/m (a soft 0.4%) and 1.9% y/y. For core CPI we forecast 0.1% m/m; this is a strong 0.1% monthly rise, representing an incremental improvement from very soft prints of recent months but suggesting core CPI is still struggling to gather significant momentum. On an annual basis, we expect core CPI to rise 1.6% y/y.

Fri, Sep15

Retail sales

Barclays: We forecast retail sales to have increased 0.2% m/m in August. For sales excluding motor vehicles we forecasts a strong 0.7% rise. Excluding volatile items such as autos, gasoline stations, food services and building materials, we expect retail sales to be up 0.6% m/m.

CPI, Retail sales and next week’s FOMC statement are the key risk events to USDJPY. Especially today’s CPI will draft the next week’s price action.

TECHNICAL VIEW


JPY cross buying demand led the USDJPY to rebound more than 3% this week. The price action remains below resistance zone 110.70-111. An upbeat CPI data could stretch the pattern to 111.40/111.70 and 112/112.30 before next week’s FOMC if 111.00 taken out.

A weekly close above 111.25 could push the trading range to 111.70/112.15 initially and later 114.30/115.

Support moves to 110.00, 109.40 and 108.60.

Daily range: 111.70-109.80

Click the image to open in full size.

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Old Sep 15, 2017, 2:51am   #116
 
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BoE Tightening cycle is the key. GBP FX snapshot

KeyToMarketsUK started this thread GBP soars across the board following a hawkish tone by the Bank of England. The Monetary policy summary statement revealed, “All MPC members continue to judge that, monetary policy could need to be tightened by a somewhat greater extent over the forecast period than current market expectations”.

The MPC members also judge that, “some withdrawal of monetary stimulus is likely to be appropriate over the coming months in order to return inflation sustainably to target”. We are not discounting the fact “MPC voted by a majority of 7-2 to maintain Bank Rate at 0.25%” but it is not a surprise to the market. Two members considered it appropriate to increase Bank Rate by 25 basis points.

The rate hike odds are growing to November meeting. Markets are now pricing close to 50-50 probability that rates will rise in November. The low unemployment and high inflation painted the “Hawkish” tone. Pound climbs to one year high against USD and UK yields advanced.

• Bank of England says “The unemployment rate has continued to decline, to 4.3%, its lowest in over 40 years and a little lower than forecast in August”.
• The board also said, “Underlying pay growth has shown some signs of recovery, albeit remaining modest”.
• Twelve-month CPI inflation was now likely to rise to above 3% in October. In August it had risen to 2.9% .

Following positive CPI data (Tue) GBP well supported again by the BoE hawkish tone. But we believe political risk remains a concern to GBP, might cap the cable some time near around 1.3500 levels.

Whom to follow?
If the BoE follows the Fed rate hike path cycle “gradual” the available headroom to GBP is limited. Alternatively, if it follows the Bank of Canada footsteps, the cable story will be different. In this case, we believe “extension to 1.3800” (61.8% Brexit high -Oct low) is possible. Against EUR, 0.8750-0.8700 is highly likely.
BoE says, “all members agreed that any prospective increases in Bank Rate would be expected to be at a gradual pace and to a limited extend”.

EURGBP continues the corrective decline phase, re-tested the 100DMA. It has erased the four-month bullish channel. Readers can remind we repeatedly recommended buying GBP against AUD, EUR, JPY, and NZD. Among these our favourite trade is GBPNZD rose more than 600 pips from our buying level. We shifted our focus to GBPJPY, expecting a symmetrical triangle breakout at 148.50.

NOTE: At the time of preparing this article (10.10AM NZ time) N. Korea fires missile eastward from Pyongyang, reported by Yonhap news. JPY rapid raise of 0.4% across the board.

Technical levels to watch:
GBPJPY: Resistance 148.50-149.60 (100 MA monthly)

Click the image to open in full size.

GBPUSD: Resistance 1.3500-1.3530. Strong support remains at 1.28-.2775.

Click the image to open in full size.

GBPNZD: Resistance 1.8760 (100EMA weekly)

Click the image to open in full size.

EURGBP: Support 0.87500-0.8700

Click the image to open in full size.

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Old Sep 17, 2017, 11:00pm   #117
 
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JPY crosses witness multiple bullish patterns.

KeyToMarketsUK started this thread Our main focus over the week ahead will be the RBA Monetary Policy Meeting minutes, US FOMC minutes and BOJ Policy rate,
• Minutes of September 2017 Monetary Policy Meeting of the Reserve Bank Board, 19 September 2017, 11.30 am AEST.
• FOMC meeting and quarterly Summary of Economic Projections, September 21.
• Bank of Japan Statement on Monetary Policy, September 21.

Over weekend new from Japan gain some traction. Japanese Prime Minister Abe mulling snap election as early as October.
The Nikkei reported, “Abe is apparently weighing a dissolution of the lower house as early as the end of this month, with a general election to follow in October”.

North Korea fired another missile launch on last Friday. JPY crosses refresh buying on a dip and witness multiple bullish patterns. The following are the JPY/ Asia FX snapshots.

USDJPY
• Last week price action was the strongest in 2017.
• Facing resistance at 50MA (monthly).
• Rebound nearly 38.0% (118.65-107.30 fall).

Before rebounds to 111.30 last week, USDJPY has taken all the stops placed below 108.00, low made at 107.30 on Sep 08. Our buying stopped at 107.50.
As shown on the below chart USDJPY trading on a verge of a trendline (blue) and a neckline breakout (black)

Click the image to open in full size.

On the four-hour chart, the price pattern spotted with an inverse H&S pattern. A neckline breakout needed to aim at 111.80 and 113.25.
Support zone finds between 109.85 and 109.50 its 20DMA.
A move below 109.50 needed to retest 109, 108.60 and 108.00 levels initially and 107-106.50 expected later. Alternatively, resistance seems at 111.35 its 50MA (monthly) above this resistance zone (earlier support zone) seems between 111.60-111.70 and 112.15 exists.
A weekly close above 111.35 could push the trading range to 111.70/112.15 initially and later 114.30/115.
Weekly Range: 114-106.50

AUDJPY
AUDJPY closed above 200MA(weekly) for the first time after two-years. On the weekly chart it has spotted with an inverse H&S pattern, but the neckline breakout not yet visible.
Near-term potential resistance zone seems between 89.40 July high and 50.0% fib (105.40-73.30) -90.00 April 2011 high. If propel above 90.0, we forecast a bullish reaction to 90.70, 91.30 and 93.00.
Support moves to 87.90, 87.50 and 86.50. The daily RSI appears a lower high pattern. A higher high price action might face tough resistance at 90.00. Fails to breach the resistance zone might drag towards 88-87.50.

Weekly Range: 91.30-85.00

Click the image to open in full size.

It is important to always keep in mind the risks involved in trading with leveraged instruments.

What is your Technical View?

Do you have a different idea? Please leave us a comment and get an answer from our professional analysts.​
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Old Sep 19, 2017, 12:42am   #118
 
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EURUSD: Support base rose to 1.1820 from 1.1660.

KeyToMarketsUK started this thread Last week’s price action appears downside risk and lack of economic events kept the EURUSD tad below 1.20. Undoubtedly GBP was the star last week. After last week’s US CPI data eyeballs are watching closely to FOMC meeting.

Data Review:
  • Germany CPI rose by 0.1% in August 2017.
  • Germany WPI rose by 0.3% from July 2017 to August 2017.
  • July 2017 Industrial production up by 0.1% in EA, down by 0.3% in EU.
  • EA international trade in goods surplus €23.2 bn.
  • August 2017 EA annual inflation up to 1.5% and up to 1.7% in the EU.

Upcoming data:
Tue, September 19
EA July Current account, forecast 22.3B vs 21.2B.


Wed, September 20
August Germany PPI forecast 0.1% vs 0.2%.


Thu, September 21
ECB publishes Economic Bulletin.

Fri, September 22
ECB President Draghi speaks at Trinity College in Dublin, Ireland.
EA, France and Germany Flash PMIs
Barclays: We expect euro area flash composite PMIs to edge down from its multi-year high to 55.6. We look for France composite PMI to decline by 0.3 to 54.9, while German composite PMIs should tick up, consistent with very strong forward-looking components in the past month.

This Sunday, 24 September 2017 we have German election.

Our main focus over the week ahead will be the FOMC meeting and quarterly Summary of Economic Projections, September 21. Press conference at 2.30PM EST.


TECHNICAL VIEW

Last two week’s price action maintaining a consolidation phase between 1.1820 and 1.2100. The overall trend remains bullish and the EUR strength likely to continue to the October meeting.

The recent pullbacks are shallow. The higher low pattern remains (H4 chart), a break below, then this could confirm the near-term retracement to earlier support base 1.1680-1.1660..


Click the image to open in full size.

A footprint above 1.20 needed to visit the near term supply zone 1.2070 and 1.2130.

Support base rose to 1.1820 from 1.1660.

View: We believe the EUR dip to be bought to the October meeting. Further headroom available until holds 1.1660.

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What is your Technical View?

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Old Sep 20, 2017, 1:05am   #119
 
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NZDUSD: General election risk

KeyToMarketsUK started this thread The kiwi dollar is largely muted after the June 2017 quarter current account data. In June 2017 quarter, NZ’s current account deficit narrowed to 1.6$ billion.
Stats NZ said, New Zealand’s goods and services balance was a surplus (we exported more than we imported), but the deficit in the primary and secondary income balance means the overall current account balance is a deficit.

The primary risk to NZD is general election will be held on Saturday 23 September 2017.
NZDUSD re-tested 200MA and rebounds 50.0% (0.7557-0.7143 correction). It has potential resistance seems between 0.7345-0.7400. If propel above 0.7425 the relief rally will extend to 0.7470/0.7480 in the near term and 0.7550 in the medium term.

If fails between 50.0%-61.8% (0.7557-0.7143 fall) we could confirm the formation of the right shoulder. In this case, 0.7250, 0.7200 and 0.7150 expected in the near term and 0.7000 in the medium term.

The daily RSI and oscillator appear bullish. Today in Asia trade (9.40am, AEST) NZDUSD rose 0.06%, trading on a verge of a bullish ascending triangle spotted on the daily chart.

Click the image to open in full size.

On the NZD crosses, we repeatedly forecast GBPNZD bullish reaction. We still believe more headroom available.

Weekly range: 0.7420- 0.7130
Monthly range: 0.7500-0.7000


It is important to always keep in mind the risks involved in trading with leveraged instruments.

What is your Technical View?

Do you have a different idea? Please leave us a comment and get an answer from our professional analysts.

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Old Sep 21, 2017, 12:38am   #120
 
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Summary of banks BOJ preview. JPY crosses technical overview.

KeyToMarketsUK started this thread USDJPY elevated to 112.50 breaks above resistance zone seems between 112.00-112.30. The hawkish Fed lifted our USDJPY bullish view somewhat.

The central banks’ divergence is the key factor to our bullish view. Fed confirms the Balance sheet contraction, but BOJ remains in the opposite direction.

Higher interest rates and rate cut expectations in US are the additional factors to elevate the cross higher in the medium-term perspective.

Recent election announcement may be supporting the USDJPY and yen crosses bullish bias in the near term.

What’s on today?

Bank of Japan Statement on Monetary Policy, September 21.
Bank of Japan will hold first Monetary Policy Meeting (Sep 19-21) after replacing two members.

Goushi Kataoka, a 44-year-old former economist at Mitsubishi UFJ Research and Consulting and an advocate of massive money printing.

Hitoshi Suzuki, a 63-year-old former deputy president of Bank of Tokyo-Mitsubishi UFJ, who is well-versed with financial markets.

Barclays: We expect current policy to remain intact, but will be looking for evidence of a change in the tone of policy dialogue, possibly reflecting a more dovish bias.

Merrill Lynch: We believe the BoJ will maintain the status quo at its Monetary Policy Meeting on 20-21 September.

Deutsche Bank: We do not anticipate any big policy changes at this week’s MPM, but our economists have suggested that the removal of the ¥80trn figure or a switch to a ¥60-80trn range would be realistic and desirable.

TECHNICAL VIEW


As we forecast in our Monday’s daily article, it has given an upside breakout through the neckline and trend line as well.

Forecast: “A neckline breakout needed to aim at 111.80 and 113.25”. Now we are waiting for 113.25.

Resistance seems between 111.80 and 112.40 above this 113.00/113.20 possible.

Supports move to 111.00, 110.60, 109.80. Additional support finds at 109.50 it’s higher low.

Our last week’s another forecast, “A weekly close above 111.35 could push the trading range to 111.70/112.15 initially and later 114.30/115.” We are watching May-July range.

Click the image to open in full size.

JPY crosses:

AUDJPY and CADJPY gave an inverse H&S pattern (weekly) breakout. We remain bullish on JPY crosses especially against AUD, CAD, EUR and GBP to the Japan election. Earlier we gave a bullish setup on AUDJPY,CADJPY and GBPJPY.

Click the image to open in full size.

Click the image to open in full size.

Click the image to open in full size.

Click the image to open in full size.

It is important to always keep in mind the risks involved in trading with leveraged instruments.

What is your Technical View?

Do you have a different idea? Please leave us a comment and get an answer from our professional analysts.
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